British Banks fall after waiving dividends

  •   03/04/2020 - 11h36
  •   DEHOUI Lionel

Wednesday has been eventful enough in the United Kingdom, which saw several of its companies give in to pressure from the supervisory authority. While this fact was most noticeable yesterday, it is only a continuation of what is happening every day around the world. Indeed, the shares of the major banks in the UK were down significantly on the first day of April. It is important to talk about that. The London Stock Exchange was marked by the fall of the FTSE-100 Index to 3.51%. Just one hour into the session, HSBC Group lost 8.96%, Standard Chartered 6.48%, Lloyds Banking Group 5.56%, Barclays 5.01% and Royal Bank of Scotland also lost 4.96%. This sector of the British banking industry initially wanted to make a payment of eight billion "pounds" to its shareholders. That is approximately EUR 9.0 billion.

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British Banks fall after waiving dividends

The reaction of the PRA

Last Tuesday, the PRA, which is nothing more than the Prudential Regulatory Authority, the gendarme of the British banking sector, asked the latter to waive its payment. Therefore, the most senior executives of banks and insurance companies will not receive bonuses this year according to the PRA's request to the banking and insurance sectors. According to the PRA, UK banks are sufficiently capitalised to weather the recession.

This recession is not typical of England, but is spreading all over the world. Several countries in Europe (such as Switzerland) have called on the entire banking sector to exercise restraint with regard to dividend payments. In the past week, the ECB has therefore suspended its payments for the financial year 2019 and the current financial year (2020). In France, this measure was reiterated on Monday by the supervisory authority of the sector.


BNP Paribas, Société Générale, Natixis and the Finma

The economic news in Europe also revolves around the suspension of dividend payments by groups to their shareholders. Thus société Générale had already stated in a press release that it has officially waived the dividend payment. The current conditions of health crisis are the main cause of this. The Natixis group also announced the same news through an announcement. As a result, BNP Paribas shareholders were worried.

First of all, it should be remembered that the BNP Paribas Group had previously stated that it was maintaining its dividend. However, in view of the various decisions announced, the group announced that it was carefully examining the ECB's communication in order to issue the relevant press release in the coming hours. Shareholders' eyes are also fixed on the Swiss financial market because of FINMA's statements on the suspension of dividends to individual shareholders.

Information: FINMA is the Swiss financial market authority. In Switzerland, it has unsuccessfully appealed to the UBS Group to temporarily suspend the said remuneration due to the economic effects of the Covid-19 pandemic. For the time being, UBS has simply confirmed its dividend. The next few days will prove one or the other right.